Oil prices fell more than 1 per cent on Tuesday as the dollar strengthened and investors anxious about crude oversupply, bracing for an expected weekly build in USA stockpiles as Iran said it was on target to reach peak production.
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Oil prices have increased with the U.S. dollar coming off a two-week high.
Brent crude oil futures fell $1.33, or 2.75%, to $47.04 per barrel.
USA crude futures rose 24 cents to $44.94 a barrel, after falling $1.65, or 3.6 percent, in the previous session.
The West Qurna 1 field, developed by Exxon Mobil, and South Oil’s Luhais and Artawi fields contributed most to the increase, they said.
The U.S. government is due to release its crude-stockpile report later Wednesday.
The dollar hit a three-week high against the yen after Federal Reserve Chair Janet Yellen bolstered expectations in a speech on Friday about a hike in interest rates soon.
A weaker dollar will make it cheaper for buyers holding other currencies to make oil purchases. Prices on Wednesday were capped by a report that USA crude stockpiles increased by 942,000 barrels last week, according to the industry-funded American Petroleum Institute.
On top of that, Saudi Arabia generated crude oil production volumes of 10.67 million barrels last month, which is the highest record level in its history. Russian Federation is also expected to attend the IEF.
Meanwhile, as September approaches there is continued speculation over whether major oil producers, including Russian Federation and members of the Organization of the Petroleum Exporting Countries, will agree to limit output.
It comes as market remain hopeful for OPEC support, with speculation continuing to talk up wishful thinking that the cartel could reach some kind of agreement to ease oversupply at meetings later this month.
The survey forecast US light crude will average $43.96 a barrel in 2016, compared with an average so far this year of around $41 per barrel. Market volatility will persist while demand and supply rebalance, according to executives gathering at an oil conference in Norway. Al-Falih said he doesn’t “believe that an intervention of significance is required” and doesn’t support a production cut.
Prior to the beginning of last week we forecasted that the price of Brent crude would trade between $48.50 and $50.65.
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Saudi Arabia will be willing to listen to other producers and what they have to offer when it comes to an output freeze, the kingdom’s Energy Minister Khalid Al-Falih said in an August 25 interview in Los Angeles.
